Posts Tagged ‘Gold Miners’

Gold prices have climbed by around 8% year to date, close to what they gained for all of last year & could rally further, potentially to as high as $1,500 – A 20% rise from its current level of roughly $1,250. Yesterday, gold futures slipped & broke numerous technical levels, but as it bounces back off support, the question is will the bounce continue? It also seems that investors will not abandon gold.

The conditions that are favorable for gold, will prove fatal for overvalued stocks that are looking for a trigger to tumble. Remember, diversification is crucial to any investment strategy. As a fraught 2017 unfolds, consider re-balancing your portfolio to accommodate the likely economic, business and market volatility ahead. You can hedge your bets, with physical gold.

It’s very interesting to see gold prices going up despite a challenging environment of higher rates & a manipulated paper market. That tells me that there’s more to the story, that there’s more going on behind the scenes that’s driving the gold price higher. I’m very impressed with the present gold action & here’s why I expect gold prices to really take off going forward.

Distracted by extreme Trumphoria market distortions, futures speculators have totally missed this gold boat. They won’t stay on the sidelines for long though as gold keeps powering higher. They will rush to get properly positioned for more gold upside. All that coming buying will feed on itself and really accelerate gold’s new upleg, catapulting gold prices much higher.

The gold market is both amazingly large and stunningly small, depending on how you look at it. On one hand, there’s a tremendous amount of value packed into the shiny metal. But the reason it packs so much value per ounce is that there’s precious little of it in the world. That scarcity could continue to drive up the value of gold as more people stake their claim in the precious metal.

Gold has managed to rally sharply in recent weeks without any capital inflows from American stock investors. They not only weren’t buying GLD shares, they continued to aggressively sell them as evidenced by a couple big GLD-holdings draw days so far in January. The situation implies the investment gold buying hasn’t even started yet & that means big gold buying is still coming.

Throughout 2017, gold should be supported by even deeper negative real rates, which could fall to their lowest level in two years as inflation outpaces nominal interest rate increases. Gold has tended to rise when real rates (what you get when you subtract inflation from the federal funds rate) fell into negative territory. Being optimistic helps you to see the opportunities that others might not.

When gold prices broke through $1,200 yesterday, it triggered a mass of automated selling and that has pushed the market into extremely oversold territory. If gold prices can hold $1,170 then I think we could see the market bounce back. Another positive for gold prices is the US dollar, which is in extremely overbought territory and due for a correction.

Portfolio-destroying inflation is around the corner because of reckless government spending and unsustainable debt, so stock up the bomb shelter and buy gold. The latest data suggests that the inflation beast is stirring from its long slumber, which means that the classic inflation hedge of gold is on the verge of a sustained rally.

No matter how awesome Trump’s pro-growth economic policies ultimately prove, these Fed-levitated stock markets near bubble valuations still face an overdue bear. And Trump’s big-spending agenda is going to fuel bigger deficits, bigger debt, and inflation for years to come. That’s super-bullish for gold since it tends to move counter to stocks.

Over the long term, people have realised the benefit of portfolio diversification. Holdings in gold-backed ETFs were 2,051 metric tons by Oct. 14, the highest level since June 2013. In the latest gold and silver COT report, paper players made big strides in bringing the market back into balance & setting the stage for an eventual rebound. The gold market may surprise us again.

We are entering a seasonally strong period of time for gold and silver. My stance is to take a look at an even bigger picture which shows that silver may be finding investment demand at this seasonally bullish time of year. Wedding season is also a good time to own gold as is the month of September (a month I don’t like to short precious metals) which begins today.

There has been no major correction in the gold and silver market all this year, which is inflated after months of rallying, and we will look at some evidence here that the correction may have considerably further to go, in points terms if not in time terms. If the dollar rallies, gold could get whacked, but would be expected to be followed by a reversal & thus present a MAJOR buying opportunity.

Despite the 25% decline in the gold price since 2013 to $1,050, profit margins only fell by 12% as the industry responded by cutting costs and restructuring their operations. With gold now trading at $1,350 per ounce and AISC holding steady, net profit margins for the industry have increased from $220 to over $500 per ounce – an increase of 127% in just 7 months.

The global gold output has been contracting since 2013. There are just not that many new mines being found and developed, and this is “very positive” for the gold price going forward. Thomson Reuters too is of the view that global mine supply is set to begin a multiyear downtrend in 2016. Demand for gold, on the other hand, should remain strong, helping to support prices even more.

Gold has arrived at an important target on its 10-year arithmetic chart – a trendline target, which is a good point for it to react back, which is made more likely by the latest extreme COT & sentiment readings. Such readings usually, but not always occur at a top or ahead of a reaction or period of consolidation. Should it succeed in breaking above this trendline, the $1.550 level may soon be seen.

Gold price’s historic chart has three distinct phases: a strong uptrend followed by a consolidation and a strong downtrend. The ultimate test is taking place right now: Gold can break out of its downtrend. But will it do so? That is the million dollar question, and it will have huge consequences for metal investors, but also for markets in general.

“It’s very difficult to be bearish on silver and gold — especially silver, which has drawn particular interest from investors this year. With so much pricing momentum, and so many geopolitical and market factors blowing in its sails, there’s no reason to think silver won’t continue to post gains through the end of the year.” Events close-by could easily push the price of silver above $30.

Gold demand peaked in the middle of 2010 & went sideways for a few years before succumbing to the bear market. That lack of strong demand in 2011 while Gold surged, was a warning sign. The amount of Gold in GLD can be a sort of an indicator for the sector. While Gold & gold shares are correcting now, the real time data coming from GLD suggests Gold demand is & should remain firm.

If gold, currently at $1,320 an ounce, can meander around here for a while, that would be constructive. It might even need to fall a bit – perhaps as low as the $1,250s or $1,260s. Such action, if it occurs, could actually be positive in the grander scheme of things. Gold prices could just also keep on pushing higher. It’s a bull market & that’s what bull markets do sometimes, particularly golden ones.